Bathing Grooming Linda 60 20 Sandy 50 25 A Linda has an absolute advantage in do
ID: 1210542 • Letter: B
Question
Bathing
Grooming
Linda
60
20
Sandy
50
25
A Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming.
B Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming.
C Sandy has an absolute advantage in dog bathing and dog grooming.
D Linda has an absolute advantage in dog bathing and dog grooming.
Suppose the Chinese government decides to abandon pegging the yuan to the dollar at a rate which undervalues the yuan. Using the figure above, the equilibrium exchange rate would be ________ and Chinese exports to the United States would ________ in price. A $0.11/yuan; decrease
B $0.11/yuan; increase
C $0.14/yuan; increase
D $0.13/yuan; increase
Explanation / Answer
(6) Image not visible.
(7) (A)
Higher productivity in US results in higher growth rate in US compared to that in India. As US grows faster, its import demand rises faster, so it imports more Indian goods. higher demand for imports from India increases the demand for Indian currency (Rupee) and decreases the demand for US Dollars, so value of Rupee rises relative to dollar.
(8) (B)
If a country no longer has comparative advantage in a good, producing it will lower the country's income and result in higher inefficiency. So, switching to import will increase income and result in more efficiency.
(9) (D)
(10) (A)
Linda can bathe more dogs per week than Sandy can (60 > 50), so Linda has absolute advantage in bathing.
Sandy can groome more dogs per week than Linda can (25 > 20), so Sandy has absolute advantage in grooming.
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